Trading of commercial goods and services is different between business-business and that involving the private sector and the government. These differences are thus governed by various regulations namely; Federal Acquisition Regulations (FAR) and Uniform Commercial Code (UCC) respectively. UCC involves equality between the private firms undertaking the transactions that are the market pricing is used to ensure a balance between the purchaser and suppliers. FAR, on the other hand, is unequal with the government gaining more than the vendor (McCue, & Johnson, 2010). These differences are due to the private sector focus on maximizing profits while ensuring each firm is working to the benefits of the shareholders thus the free market is encouraged.
The government uses taxpayers’ money thus each product or service purchased must be worth its price. UCC does not support transparency whereas FAR promotes transparency of all the purchasing procedures. In the case of goods inspection, the buyer bears the cost, but if the goods are rejected, the seller will pay for the inspection costs under the UCC. Within FAR the supplier must carry out the inspections and provide future strategies and maintenance services to the government (McCue, & Johnson, 2010). Warrants are more emphasized under UCC compared to FAR. Lastly, the FAR allows the government to change the modify the contract unilaterally whereas UCC equitable contract adjustment of time and schedules is propagated.
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Lastly, globalization has expanded the market has also contributed to competition increment hence the need for collaboration between the purchasing and supply management department. The collaboration will ensure a flow of goods for the purchasing firm and market for the supplier. The two companies may also gain from enjoying competitive advantage of market research by information sharing and issues related to technology. Although collaboration is beneficial, it can be challenging if legal departments are not included to ensure contracts are signed by both parties to ensure successful collaboration relationship. The legal department will help the purchaser sign and negotiate a favorable and long-term preferred supplier agreement that specifies all the legal and business terms that may include the pricing issues, deliveries, and expert services required by the purchaser use the products (Weele, 2010). The problem of price fluctuations and ensure quality goods are always supplied to the company must be signed to benefit both parties.
References
McCue, C. P., & Johnson, B. R. (2010). Strategic procurement planning in the public sector . Herndon, Va: National Institute of Government Purchasing.
Weele, A. J. (2010). Purchasing & supply chain management: Analysis, strategy, planning and practice . Andover: Cengage Learning.
